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Gold could end the year with its 12th consecutive annual gain, but its 2012 haul of 6% is the smallest since 2008. This year, the allegedly precious metal has underperformed stocks in the U.S., Europe, Japan, India, and Thailand; the Chilean, Colombian, and Mexican pesos; corn, cocoa, oats, soybeans, pork bellies, natural gas, Phoenix real estate, Monets, and Kandinskys, not to mention silver, platinum, and even lead. Bring me frankincense and myrrh, because all that glitters, lately, isn't gold.

Gold's struggle raises the question: Is it still a viable investment, and if so, what's the best way to bet on it?

On paper, the case for gold is as solid as ever. Global central banks are printing money with gusto, governments are devaluing paper currencies, and the $100 bill has just overtaken the dollar bill as our most heavily printed note. In fact, it's precisely because gold remains such an appealing store of wealth that throngs of investors—and speculators—can't help flocking to it. As a result, gold increasingly trades less like a safe haven and more like a risky asset.

Jack Ablin, BMO Private Bank's chief investment officer, thinks gold prices have grown out-of-whack with inflation expectations and other commodities. But a few things might support gold in the long run. "Commodities often become victims of their own success as high prices beget increased production," Ablin says. "However, global gold production remains relatively flat even though gold prices have soared five-fold over the last 12 years."

Central banks and Asian consumers also continue to hoard gold. Nearly 40% of the world's supply is recycled, and the ability of owners to liquidate gold as prices surge bolsters supply and helps ease the buildup of price bubbles. Every piece of gold jewelry or coin ever made still has value, notes Nicholas Colas, ConvergEx Group's chief market strategist. "Can you say the same thing about stocks or bonds?" he asks.

At $1,659 a troy ounce, gold has come a long way since it sold for $18.92 in 1911. But in the short term, it helps that gold has corrected nearly 8% since early October and is 12.2% off its 2011 peak.

So where might gold bugs dig? Gold-mining stocks have lost nearly a fifth of their value since late 2011.
Newmont MiningNEM -0.6940427993059572%Newmont Mining Corp.U.S.: NYSEUSD17.17
-0.12-0.6940427993059572%
/Date(1438376445165-0500)/
Volume (Delayed 15m)
:
9234270AFTER HOURSUSD17.3
0.130.7571345369831101%
Volume (Delayed 15m)
:
959815
P/E Ratio
17.701030927835053Market Cap
9083874264.60686
Dividend Yield
0.5824111822947% Rev. per Employee
266771More quote details and news »NEMinYour ValueYour ChangeShort position
(ticker: NEM) trades at just nine times projected profits, well below its median of 24 times in the past decade. Its dividend yield has risen to 3.2% and return on capital is 13%, both decade highs. Price/earnings ratios for
Goldcorp
(GG) and
Barrick Gold
(ABX) are also at decade lows.

Miners' operating expenses are a concern, but should stay contained if energy prices behave and as companies cut costs. Gold prices have soared as governments and investors lunge at physical gold, Ablin says: "For that reason, gold has climbed while comparative equities have lagged."

The ratio of the NYSE Arca Gold Miners Index to gold prices has shrunk to about 0.7—the lowest in 12 years, and less than half its reading in 2006. Odds are good that gold stocks will start outperforming the metal, and are the safer way to bet on gold's enduring shine.

MICHAEL HARTNETT'S WIFE ONCE SAID that the best part about living in London was…Paris. Likewise, the BofA Merrill Lynch chief investment strategist thinks the best thing for the stock market in 2013 might well turn out to be…bonds.

With investors backing off the crowded bond market, the yield on 30-year U.S. Treasuries climbed quietly to 3% last week—up from record double lows near 2.5% reached in the summer and in 2008. Along with 2012 rallies of 106% for home-building shares and 56% for banks, bonds might be discounting "the revival in 2013 of the two missing ingredients of a strong U.S. recovery: credit and jobs," Hartnett wrote recently. A further rise in the long-bond yield to 3.5% or 4% would corroborate the notion that a stealth rotation from bonds into stocks has begun.

Of course, forecasts have been rife in recent years for a great bond-to-stock migration. And they've been wrong, becoming about as convincing as the boy who cried wolf. But all that money printed may be reaching Americans at last: The portion of disposable income applied toward mortgage and consumer-debt payments has fallen from 14.08% in 2007 to 10.61% in the latest quarter, the lowest level in 31 years. If we don't go over the fiscal cliff, improving wages might add to the foundation being laid for a healthier credit cycle.

Before Friday's pullback, transportation stocks had nudged above their recent range; tech stocks have rebounded above their 50-day and 200-day averages, and the National Association of Home Builders index has risen for eight months, its longest streak ever. Might last week's deal to sell the storied 220-year-old New York Stock Exchange to a derivatives upstart mark the bottom of our indifference toward stocks?